Tax Shortfalls Widen New York’s Revenue Gap, Shrink Medicaid Budget

Gov. Andrew Cuomo proposed moving money between state accounts and other one-shot actions to cover up a $2.6 billion state revenue shortfall, according to a budget update.

Mr. Cuomo, a Democrat, announced this month that the state’s estimated income tax payments around the turn of the calendar year were $2.3 billion behind projections — a result of poor performance in the stock market and, the governor said, the migration of wealthy New Yorkers in response to the 2017 federal tax law. The higher figure includes an additional shortfall in tax withholdings.

The amended budget released Friday proposed to cover this gap by recalling $750 million of cash that had previously been earmarked for capital expenditures, using $316 million in monetary settlements won from financial firms, $632 million in sweeps from other programmatic funds, $499 million in reduced payments for local assistance and $177 million in savings from state agency operations.

The size of the budget gap in the coming fiscal year, which starts April 1, increased from $4.6 billion when Mr. Cuomo proposed his budget in January to $5.9 billion in the latest projections. To cover the wider gap, Mr. Cuomo lowered by $550 million the planned increase in Medicaid spending and booked other operational savings, including the closure of up to three prisons.

The amended budget sets even tighter parameters for negotiations between Mr. Cuomo and state legislators over the coming weeks. The governor is resisting calls from his fellow Democratic lawmakers to raise taxes and increase spending on education and other programs.

And after criticism at a public hearing, Mr. Cuomo added more meat to his proposal to implement a system of congestion pricing for vehicles that enter the core of the city. The governor and officials at the Metropolitan Transportation Authority hope such a system will raise enough money to fund $15 billion for capital improvements through 2024.

The amendments propose the creation of a “capital lockbox” to hold any funds, and says the tolls on vehicles entering Manhattan south of 60th Street will be variable. They will be set by a new panel of six experts, but Mr. Cuomo’s amendments do not specify who will appoint them.

The budget amendments also task MTA officials with developing a restructuring plan. Mr. Cuomo has previously said the additional funds for the beleaguered authority should only be authorized if its structure is streamlined.

The amendments specifically call on the MTA to use design-build contracting on major capital improvements and would change the terms of MTA board members so they aligned with the politicians who recommended them.

https://www.marketscreener.com/news/Tax-Shortfalls-Widen-New-York-s-Revenue-Gap–28022870/